MORGAN HILL -- Reports of suspicious activity in the parking lot of a Condit Road hotel led to the arrests of three suspects and a large stash of counterfeit bills on Monday, police said.

The lot of the Executive Inn had been under increased surveillance because of concerns reported by neighbors, said Morgan Hill police Sgt. Carson Thomas.

"There were multiple concerned citizens talking about cars driving in and out, so we were systematically patrolling the area and a stolen vehicle was spotted," Thomas said.

Officers saw a man move the stolen car, and arrested 26-year-old George Haro of San Jose after learning he was a parolee considered at large for not meeting conditions of his release.

Another man fled the scene and was taken into custody a short distance away, where he first tried to conceal and then destroy a pipe of the sort associated with smoking narcotics, Thomas said.

Then, officers searched a hotel room linked to the subjects and found Staci Potter, 25, of San Jose, as well as a large amount of counterfeit bills.

"We're talking about multiple denominations, $100s, $50s, $20s," Thomas said, adding that they did not appear to be professionally produced.

The subjects were all believed to be under the influence of a controlled substance and arrested.

"They all face a laundry list of charges," Thomas said.

He added that investigators have contacted nearby agencies to see if the suspects might be responsible for other crimes. All remain in custody with a court date on Wednesday.

Contact Eric Kurhi at 408-920-5852. Follow him at  Twitter.com/erickurhi .